UPDATE 3-China's COFCO, Japan's Itochu form food alliance

(Recasts with company, analyst comments)

By Yuko Inoue and Risa Maeda

TOKYO Aug 4 (Reuters) - China's largest agricultural trading and processing company, COFCO, has enlisted Japanese trading house Itochu Corp (8001.T: Quote, Profile, Research) to help it prepare for possible increases in demand for grains and other food from around the world.

Itochu, Japan's fourth-biggest trading company, said on Monday it and the Chinese company were discussing joint purchases of grains, dairy products and meat to boost their buying power in the international market, after signing a strategic alliance last month.

"China wants to increase purchases of food on the global market as domestic demand is getting pretty tight," Itochu Executive Vice President Yoshihisa Aoki told a news conference.

China's exports of key grains such as corn and rice are fast shrinking on the back of growing demand at home.

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Rapidly increasing wealth in China has also opened the way for sales of high quality farm produce from Japan, as tastes in the world's most populous nation turn to meat, dairy products and imported food.

At the same time a rally in international grain prices, such as corn and soybeans and higher fuel and freight costs have made it difficult for food importers to find stable supplies at reasonable prices.